Alberta’s New Democrat Party (NDP) has released a costed budget 13 days ahead of the provincial election on May 29, which commits to net-zero carbon tax targets, increases spending across the board, and raises the corporate tax rate in Alberta from 8 percent to 11 percent.
The NDP states the tax increase will increase revenue by $6.2 billion over three years and would be the “lowest in the Country,” according to the budget released May 16.
The budget is based on recommendations by economist Todd Hirsch, former chief economist at the government-owned Alberta Treasury Branch. Hirsch was commissioned to prepare a financial report for the NDP in fall 2022. NDP Leader Rachel Notley said the party accepted his recommendations in full.
“This plan makes a long-term investment in our economy and jobs by committing to net-zero carbon targets. Not only will this attract investment, the cost of doing nothing is massive. We have to avoid future economic and environmental catastrophes,” Notley quoted Hirsch as saying.
Hirsch advocated on May 9 for strengthening the economy “by protecting the vulnerable, embracing diversity, denouncing racism and fighting hate. Foster creativity through arts and culture.”
“Strengthen the economy by reducing carbon and other GHGs, and committing to net-zero carbon targets. Focus on the long-term, not the short-term. The savings of doing nothing today are far outweighed by the economic and environmental catastrophes if we do nothing,” Hirsch said.
Alberta NDP Leader then-Premier Rachel Notley gives a concession speech after election results, in Edmonton on April 16, 2019. Jason Franson/The Canadian Press
The NDP budget includes spending hikes for health care, building more schools, hiring more teachers, creating health care teams, and adding tax credits for children’s activities at a three-year cost of $350 million.
Health care infrastructure, clinics and hospitals, would receive $435 million in 2023–24, another $917 million in 2024–25, and $1427 million in 2025–26. As part of the NDP’s “Better health care” category, the party plans “modern, secure, polycarbonate” health care cards, at $20 million in each fiscal year of 2023–24 and 2024–25, plus another $6 million in 2025–26, for a total investment of $46 million.
The budget includes $80 million over three years for free birth control for women, $225 million over a three-year period for five insured mental health sessions, and $910 million over three years for a “healthcare workforce recruitment and retention fund.”
Connecting 1 million residents to a family doctor is budgeted at $450 million over three years, plus $35 million for “evening and weekend care from family doctors,” with total spending for “Better Healthcare” over $2 billion.
Building and modernizing schools is budgeted at $250 million year one, $500 million year two, and $750 million year three. The line item for “cities, communities, arts and culture” sits at $491 million from 2023 to 2026.
“Jobs, Energy, and Climate Change” see an investment of $45 million year one, $78 million year two, and $118 million year three, for a total of $241 million.
The NDP promised May 15 to cut the small business tax if elected, which the party predicted will reduce revenue by $473 million over three years. The party also promised an Alberta Future Tax Credit, a Digital Media Tax Credit, and tax credits for agriculture and investors, for a grand total over three years of $695 million.
The NDP promised a budget surplus of $1.2 billion in the next year, half of what the United Conservative Party (UCP) had in their forecast, for a total of over $3 billion over the three-year fiscal period.
UCP Says NDP Budget Will ‘Kill Jobs’
The United Conservative Party (UCP) responded to the NDP budget on May 16, stating that Notley was going to kill thousands of jobs with what amounts to a “38% tax hike on Alberta businesses and job creators.”“Notley is going to chase away investment, kill jobs and depress our entire economy AGAIN if we let her,” the party said.
UCP Leader and Premier Danielle Smith, running for reelection, said on March 16 that Notley’s top economic adviser Hirsch “admitted today he has done ZERO analysis on the negative impact this hike would have on investment and jobs.”
“Maybe that’s because Rachel Notley already did it when she was premier and it created a jobs crisis and chased billions of dollars of investment away,” said Smith.
Alberta Premier Danielle Smith speaks at the United Conservative Party AGM near Edmonton on Oct. 22, 2022. Amber Bracken/The Canadian Press
The UCP shared a news clip of Hirsch at a Calgary news conference on May 16. He was asked: “Have you done any analysis on what the ramifications or implications [are] on investment, on unemployment, by going from 8 percent to 11 percent? Have you done the analysis, and what does it show?”
He responded, “I haven’t done that analysis.”
At a May 16 news conference, UCP candidate Brian Jean—former lawyer and federal MP, and most recently Alberta’s minister of Jobs, Economy and Northern Development—said, “When the NDP came into power Alberta’s unemployment rate was one of the healthiest in the country. When the NDP were voted out Alberta’s unemployment rate was the highest among comparable provinces, and it was higher than the national rate.”
“What else happened when Rachel Notley hiked taxes on Alberta job creators? Well, we know that investment fled, businesses fled, jobs disappeared, tens of thousands of Albertans moved away to other provinces that offered them jobs,” said Jean.
The UCP has said it would not raise corporate or personal income taxes if elected and will further create a new tax bracket of 8 percent to save Albertans money on personal income taxes.
Low tax jurisdiction is a significant encouragement for new businesses to set up shop in Alberta, said Jean.
The UCP “cut the tax from 12 percent to 8 percent to attract investment, and it worked,” he said. “For the last few years, major corporations have been making major announcements about moving to Alberta.”
He said a tax hike for corporations would put the jobs and livelihoods of Albertans and families at risk. “You lose the investment and you lose the jobs and you trickle down, lose the growth in our economy. It is the world coming to Alberta to invest that makes Alberta prosperous.”
Kris Sims, Alberta director for the Canadian Taxpayers Federation (CTF), was also critical of the NDP budget. In a statement issued May 16, Sims said, “People are flocking here in record numbers to work hard and pay lower taxes, this huge NDP tax hike would be a scarecrow for entrepreneurs.”
“This NDP plan would hike taxes on job creators and that’s a reckless thing to do in a province that’s booming and hiring thousands of people.“ According to the CTF, Alberta’s revenues from the business tax are ”actually increasing with the lower tax rate.”
Alberta is forecasted to pull in $6.4 billion from the business tax in 2022–23, according to the CTF. The organization said it is an increase from the $4.8 billion that the government collected in business tax back in 2018–19 under the NDP government, when the tax rate was at 12 percent.
The Canadian Press contributed to this report.
